Today, in response to the release of details of the updated version of the “Financial Choice Act,” Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, made the following statement:
“The so-called Financial Choice Act is a piece of legislation that will essentially kill the most important aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was designed to prevent another financial crisis. Republicans and Donald Trump have once again prioritized the needs of Wall Street over the needs of hard-working Americans, with a proposal that would take away much needed protections and put our economic security at risk.
“Simply put, the Wrong Choice Act bows down shamefully to Wall Street’s worst impulses, and would lead us back down the road to economic catastrophe.
“The new version, which is even worse than Chairman Hensarling’s first draft, cannot be allowed to become law. There is too much at stake for consumers and for our economy at large.”
The “Wrong Choice Act 2.0”:
Completely guts and functionally terminates the highly successful Consumer Financial Protection Bureau (CFPB), which has already returned nearly $12 billion to 29 million consumers ripped off by predatory financial institutions. Specifically, the proposal:
Eliminates CFPB’s supervision authority over the largest banks and curtails CFPB’s enforcement tools, including those used to stop abusive Wall Street practices like Wells Fargo’s fake account scandal;
Subjects the CFPB’s funding to appropriations so CFPB’s opponents can shrink it;
Hides consumer complaints, even though CFPB’s transparent database has produced results: 97% of complaints referred to a company get timely responses; and
Gives the President extraordinary power to fire CFPB’s Director at will, politicizing it as an arm of the White House and preventing it from serving as an independent cop on the beat.
Encourages a race to the bottom for Wall Street. Financial stability safeguards, such as stress tests and living wills, are watered down across the board. In addition, these and otherrules for the largest banks to operate in a safe and sound manner -- such as enhanced capital, liquidity, and risk management – are completely eliminated for Wall Street banks that choose an insufficient leverage requirement that would encourage the kind of risk-taking that crashed the economy in 2008.
Repeals the Orderly Liquidation Authority,the emergency mechanism that prevents future bailouts and allows any mega financial company to fail safely. It is replaced with enhanced bankruptcy, which fails to fix the many shortcomings with the Bankruptcy Code exposed by Lehman Brothers’ chaotic bankruptcy.
Repeals the Financial Stability Oversight Council’s (Council) tool to designate non-banks, like AIG, as systemically important financial institutions (SIFIs) for purposes of enhanced supervision and regulation. Only four non-banks have been designated, and one, GE Capital, de-risked and has already been de-designated.
Abolishes the Office of Financial Research (OFR), which collects data and provides valuable research and analysis to help the Council identify and stop risks to our financial stability.
Subjects all federal financial regulators to the politicized annual appropriations process for funding, enabling Wall Street special interests to weaken their overseers.
Provides a two-year escape hatch for Trump-appointed regulators to administratively roll back regulations before making it easier for industry to litigate and block any future effort by regulators to restore or strengthen consumer and investor protections.
Places America’s workers at risk by curtailing the Federal Reserve’s discretion in taking into account a wide range of dynamic economic data and subjecting monetary policy decisions to short-term political pressure.
Bolsters the Trump Administration’s efforts to roll back investment protections for seniors and retirement savers, like the Department of Labor’s fiduciary rule, to the benefit of unscrupulous financial advisers.
Allows Wall Street fraudsters to get away scot-free and continue their misconduct undeterred by making it harder for the SEC to initiate enforcement actions and eliminating its authority to ban officers and directors from the industry.